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CEO Convicted in $180 Million Scheme to Defraud, Launder Money, and Obstruct Justice
PHILADELPHIA, PA – In a shocking turn of events, Dean Volkes, 53, and Donna Fallon, 52, of Long Island, NY, along with their company Devos Ltd., doing business as Guaranteed Returns, have been convicted on charges of mail fraud, wire fraud, theft of government property, money laundering conspiracy, obstruction of justice, and false statements. The conviction comes after a lengthy trial, announced Acting United States Attorney Louis Lappen.
Volkes and Fallon face substantial sentences of incarceration, as well as a three-year period of supervised release. The defendants also face a possible fine and mandatory payment of full restitution. As part of the conviction, Volkes and Guaranteed Returns are expected to pay approximately $180 million in restitution. Additionally, the jury ordered defendant Dean Volkes to forfeit bank accounts totaling $127 million.
As the President, Chief Executive Officer, and sole owner of Guaranteed Returns, Volkes was at the helm of the company that managed the returns of pharmaceutical products for healthcare providers, including numerous hospitals, pharmacies, and long-term care facilities, as well as Department of Defense facilities. Pharmaceutical manufacturers often allow expired drugs to be returned for a refund, which Guaranteed Returns handled for its clients in exchange for a fee based on a percentage of the return value.
The evidence at trial proved that from approximately 1999 through 2014, Guaranteed Returns promised its clients that it would hold their “indate” (not yet expired) drug products until they expired, and then return them on the clients’ behalf, in exchange for a fee. However, instead of returning the indated products, Volkes directed the company to steal them, return the drugs to manufacturers, and keep the refund money. The company created a system in which Volkes classified clients as either “managed” or “unmanaged.” While the company returned indated products to all clients, those Volkes designated as “unmanaged” were left with nothing, as Guaranteed Returns kept the full value of the returned product for itself.
The evidence demonstrated that through this fraud, Volkes and Guaranteed Returns stole more than $180 million from over 13,000 clients, including more than $20 million from numerous medical treatment facilities operated by the U.S. Department of Defense and other government agencies. The evidence also showed that Volkes, Fallon, and Guaranteed Returns stole clients’ refund money by diverting a percentage of the refunds into internal company accounts. In fall 2010, Volkes caused the company’s IT staff to write a computer program that allowed Guaranteed Returns to skim a portion of clients’ refund money from both expired and indated products through a computerized accounting adjustment. The CFO, Donna Fallon, then implemented this program over a dozen times, resulting in the theft of approximately $500,000 in just five months.
The jury also found that Volkes, Fallon, and Guaranteed Returns had conspired to launder the proceeds of the fraud. Specifically, the evidence showed that when the defendants returned drugs to the respective manufacturers for refunds, they intentionally combined drugs that had been stolen with drugs that had not been stolen. As a result, the payments made by the manufacturers to the wholesalers would comprise commingled funds, which the defendants then transferred millions of dollars through the company’s accounts to accounts controlled by Volkes.
The conviction of Dean Volkes and Donna Fallon in this massive scheme sends a clear message that those who engage in such brazen and widespread fraud will be held accountable. The lengthy prison sentences and substantial restitution ordered in this case demonstrate the commitment of our office to protecting the public and ensuring that those who abuse their positions of trust are brought to justice.
Key Facts
- State: Pennsylvania
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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